Customer lifetime value

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In marketing, customer lifetime value (CLV or often CLTV), lifetime customer value (LCV), or life-time value (LTV) is an estimation and prediction of the net profit that a customer contributes to during the entire future relationship with a business. The prediction model can have varying levels of sophistication and accuracy, ranging from a crude heuristic to the use of complex predictive analytics techniques. Customer lifetime value can also be defined as the monetary value of a customer relationship, based on the present value of the projected future cash flows from the customer relationship. Customer lifetime value is an important metric in that it encourages firms to shift their focus from quarterly profits to the long-term health of their customer relationships, and additionally represents an upper limit on spending to acquire new customers. For this reason it is an important element in calculating payback of advertising spent in marketing mix modeling. Customer lifetime value is often...

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